Globalization

Globalization (or globalisation) in its literal sense is a social change, an increased connectivity among societies and their elements due to, transculturation; the explosive evolution of transport and communication technologies to facilitate international cultural and economic exchange. The term is used in different to apply in various social, cultural, commercial, and economic contexts. "Globalization" can mean:

The formation of a global village - closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding and friendship between "world citizens",

Economic globalization - more freedom of trade and increasing relations among members of an industry in different parts of the world (globalization of an industry),

The negative effects of for-profitmultinational corporations - the use of substantial and sophisticated legal and financial means to circumvent the bounds of local laws and standards, in order to leverage the labor and services of unequally-developed regions against each other.

It shares a number of characteristics with internationalization and is used interchangeably, although some prefer to use globalization to emphasize the erosion of the nation state or national boundaries.

The term "liberalization" came to mean the combination of laissez faire economic theory with the removal of barriers to the movement of goods. This lead to the increasingly specialization of nations in exports, and the pressure to end protective tarrifs and other barriers to trade. The period of the Gold Standard and liberalization of the 19th century is often called "The First Era of Globalization". Based on the Pax Britannia and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was Ricardo's work on comparative advantage and Say's Law of general equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the Gold Standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is a matter of a great deal of contentious debate.

The "First Era of Globalization" is said to have broken down in stages beginning with the First World War, and then collapsing with the crisis of the Gold Standard in the late 1920's and early 1930's.

The "Second Era of Globalization" accompanies a movement in economic thought called "Neo-Liberalism", which argues that in a world of floating exchange rates, it is economically ineffective for nations to use regulation to protect their internal markets, and that it is impossible to maintain economic autonomy and monetary policy autonomy. See Mundell-Fleming Model.

This period is generally what is referred to by the word "Globalization" in the present.

Globalization in this era has been driven by Trade Negotiation Rounds, which lead to a series of agreements to remove restrictions on "Free Trade", the Uraguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.

Proponents claim that this leads to lower prices, more employment and better allocation of resources. Sympathetic critics point out that the results of Globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of Globalization have not taken the interests of poorer nations and labor into account. Unsympathetic critics link globalization with corporatization, and the increasing autonomy of corporate entities to force nation-states to bend political policy to the will of corporate entities. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and sometimes violent, protests from opponents of "corporate globalism".

Many of these trends are seen as positive by supporters of various forms of globalization, and in many cases globalization has been actively promoted by governments and other institutions. For example, there are economic arguments supporting globalization, such as the theory of comparative advantage suggesting that free trade leads to a more efficient allocation of resources, with all those involved in the trade benefitting.

Harmonization of intellectual property laws across nations (generally speaking, with more restrictions)

Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the US)

Some consider that the first successful business model of globalization exploitation, although it might be just a residue of the old colonial system, was the Indonesian regime change of 1965 when the democratic government was overthrown and the military regime under General Suharto gave US business access to new clothing factories and mining opportunities in Borneo and New Guinea. The Indonesian factories employed Muslim women of Java on twelve to eighteen hour, six or seven day shifts which combined with much lower wages gave a distinct commercial advantage to US clothes manufacture. Though the Ford Foundation originally began indoctrination of the land owning elite during the 1950's, they soon found that the military Generals were both amenable and eager to give US companies access to their nations wealth in exchange for fiscal and political aid. In preparation for the regime change the US supported the Indonesian military invasions of West New Guinea in 1961 and East Timor in 1975; in exchange the US received in 1967 mining rights to West New Guinea isolated from legal limitations such as the Fourth Geneva Convention, UN resolution 1803 "Permanent sovereignty over natural resources", or environmental controls the US Freeport-McMoRan mine is the world's largest open cut mine and is the world's cheapest source of copper; gold from the mine is sent to the US on monthly shipments.

Naomi Klein: No Logo (2001). A popular book which is very much against globalization. ISBN 0006530400

Philippe Legrain: Open World: The Truth About Globalization (2002) ISBN 034911644X - A largely pro-globalization book which responds to many of the complaints of the anti-globalization movement, written by a former Special Adviser to the World Trade Organisation Director-General.

Joseph Stiglitz: Globalization and its discontents (2002) - A book largely sympathetic to the theory of globalization from the 2001 Economics Nobel Prize winner. However, he is sharply critical of the global institutions, the International Monetary Fund, the WTO and the World Bank, regulating the process. ISBN 014101038X